Source documents (e.g., W-2s, Settlement Statements, 1099s, K-1s, etc.) are received from many different sources such as employers, partnerships, investment firms, charities, and so on, and are used to prepare tax returns. Source documents may also be referred to as tax documents. These source documents may be submitted to a person who prepares tax returns for individuals and businesses. The person who prepares these tax returns, generally referred to as a tax preparer, has a high level of skill due to the intricacies and nuances of the internal revenue service's (IRS's) tax code and the knowledge required to accurately prepare tax returns. Even using a tax software product, the tax preparer must have specialized training and expertise to navigate though the tax software product and to interpret information contained on the source documents. Therefore, each tax return generally requires a different level of skill to accurately complete. For example, a tax return with only W-2 and 1099 source documents requires the tax preparer to have less skill than a tax return with W-2, settlement statement, and schedule C business income source documents. Accordingly, due to the variations in skill required to prepare a tax return, the tax preparer must have a wide range of knowledge and experience with tax return preparation.
FIG. 1 is a simplified block diagram of a prior art method of preparing a tax return using only one tax preparer. Each tax return (e.g., TR 1, TR 2, etc.) is prepared by one tax preparer who sequentially reviews each source document, and then prepares the tax return using data obtained from each source document. For example, the tax preparer reviews the W-2, settlement statement, and 1099 source documents for the first tax return and then enters data obtained from the source documents into the first tax return to prepare the first tax return. Thereafter, the tax preparer reviews the W-2, settlement statement, and 1099 source documents for the second tax return and then enters data obtained from the source documents into the second tax return to prepare the second tax return and so on. Hence, each tax return is prepared in series using only one tax preparer at a time.
For several reasons, the preparation of a tax return was accomplished when one person at a time (as opposed to multiple people simultaneously) prepared the entire tax return. First, the source documents are traditionally in paper format and only reside with one tax preparer at a time. The tax preparer can make copies and distribute them to multiple tax preparers, however, this increases the time spent preparing each tax return. For example, additional time is spent photocopying and distributing the source documents, tracking who is working with the source documents, and merging work performed by each person into the tax return.
Second, because the hard copy nature of the source documents promoted single person preparation, currently available tax software products (e.g., Turbo Tax, Tax Cut, ProSystem fx Tax, GoSystem Tax, Lacerte, UltraTax, ProSeries, etc.) only support one person entering data into a tax return at a time. For example, conventional tax software products require the tax preparer to select and open a single tax return. Then, the tax preparer gathers all the source documents, reviews the source documents, and inputs information from the source documents into the tax return. The tax preparer moves from one source document to the next until all the information for a specific tax return has been entered. Then, the tax preparer can move to the next tax return. Therefore, it is technically impossible to have multiple people simultaneously enter data into a single tax return because currently available tax software products only support one person entering data into a tax return at a time.
Another drawback of conventional tax preparation systems and methods is that the tax preparer must have a high level of expertise to prepare the more complicated portions of the tax return. However, these expertise are wasted on the less complicated portions of the tax return. Accordingly, the tax preparer's knowledge and skills are not fully utilized during preparation of an entire tax return.
Accordingly, it should be appreciated that there is a need for an efficient work flow system and method for preparing tax returns by multiple people who have varying skill levels. The invention fulfills this need as well as others.